Sticking to type

Alternative asset management remains, in large part, a white man’s game. A recent study by the World Bank found private equity funds have fewer women in senior roles than almost any other profession, and over 60 percent of US private equity firms had no senior female professionals at all.

Numbers on other aspects of diversity in the alternatives space are generally lacking. A search for statistics on lesbian, gay, bisexual and transgender recruitment in the industry was fruitless, while no sector-specific recruitment agencies contacted by pfm were able to offer insight into ethnic diversity in alternative asset management.

Some evidence suggests the industry is becoming more diverse. The number of woman and minority-owned private equity firms in the US grew to 160 in the first half of 2016, from 150 a year earlier, according to Fairview Capital. Women-owned firms now account for more than a third of this group, an increase from 18 percent in 2014, the data show. 

There was also an increase in the number of Asian American-owned firms in the market over the past year – up from 30 percent of minority-owned firms in the market in 2015 to 50 percent by the end of the first half of 2016, according to Fairview.

But the scant statistics available also suggest slow progress. Women currently account for around 10 percent of senior private equity staff in the US, according to the National Association of Investment Companies, and that meager number is double the proportion in Europe, according to women’s advocacy group Level 20.

The issue hasn’t been swept under the rug. Various programs and initiatives geared toward improving diversity have sprung up globally, including Level 20 in 2015, which aims to increase the number of senior females in European private equity to 20 percent by 2020.

In June, the National Association of Investment Companies and the American Investment Council partnered to form the Private Equity Women’s Initiative. They drew up a list of best practices, detailing how a firm can recruit and retain female employees, and how they can ensure equality between male and female staff.

Elsewhere, the British Venture Capital Association held its inaugural LGBT networking breakfast at the start of November, to gauge demand for a program raising awareness of LGBT issues in private equity.

“An integral part of the BVCA’s mission is to increase participation and representation within our industry. We felt it was important to expand out definition to include the LGBT community because diversity, as well as being good in and of itself, also has wider business implications,” says Tim Hames, director-general of the BVCA.

Diversity of the workforce can also be achieved through recruiting staff from different backgrounds. Social mobility programs have been set up by a number of recruiters, targeting high-achieving high school graduates, college undergraduates, and post-graduates from poorer areas and under-represented groups.

“To date we’ve not had a great deal of contact with the private equity industry, but that is because firms don’t tend to recruit people at this stage of their career, rather than because of resistance,” Andrew Lilley, commercial director at Rare Recruitment, one such program leader, tells pfm.

“But even that is starting to change, and lately we have had preliminary discussions with a couple of firms.”

Rare Recruitment’s social mobility recruitment program has two prongs. Firstly, it works with 2,000 undergraduates to prepare them for the world of work – making them aware of the companies that support diversity recruitment, and helping them prepare for interviews.

It has also set up a contextual recruitment system, used by the firms it works with, to identify promising candidates that may, under a regular recruitment system, be crossed out before interview as they don’t meet set criteria.

“The system puts grades and achievements into context. For example, if a student got three B-grade A-levels they might be eliminated before interview if the requirement for the job is three A-grades. But if they obtained those grades at a school where the average result was two C-grades, they have clearly outperformed their peers and show potential,” Lilley says.

Targeting those already working in investment banking, a traditional in-road to private equity, US-based SEO Alternative Investments recruits pre-MBA professionals from backgrounds traditionally under-represented in alternative investments for a fellowship program.

It takes applicants in their first or second year of an analyst program at an investment bank, and in a 10-month program educates them on various aspects of alternative investments.

“[Alternative Investment Fellowship Program] preparation has enabled 90 percent of eligible fellows to secure full-time offers to join leading firms, including Blackstone, Brookfield Asset Management, and The Carlyle Group,” the group says.

The scheme is backed by multiple US-based private equity firms, who offer mentoring to fellowship students. Participants are also given interview and recruitment tips, an introduction to the cultures of each partner firm in the program, and are invited to attend a series of breakfast seminars with industry leaders. This is alongside an education program detailing the working of alternative assets.